Correlation Between Universal Health and Liontrust Asset
Can any of the company-specific risk be diversified away by investing in both Universal Health and Liontrust Asset at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Universal Health and Liontrust Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Health Services and Liontrust Asset Management, you can compare the effects of market volatilities on Universal Health and Liontrust Asset and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Universal Health with a short position of Liontrust Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Liontrust Asset.
Diversification Opportunities for Universal Health and Liontrust Asset
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Liontrust is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Liontrust Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontrust Asset Mana and Universal Health is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Universal Health Services are associated (or correlated) with Liontrust Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontrust Asset Mana has no effect on the direction of Universal Health i.e., Universal Health and Liontrust Asset go up and down completely randomly.
Pair Corralation between Universal Health and Liontrust Asset
Assuming the 90 days trading horizon Universal Health Services is expected to generate 0.87 times more return on investment than Liontrust Asset. However, Universal Health Services is 1.15 times less risky than Liontrust Asset. It trades about -0.1 of its potential returns per unit of risk. Liontrust Asset Management is currently generating about -0.18 per unit of risk. If you would invest 23,675 in Universal Health Services on September 2, 2024 and sell it today you would lose (3,175) from holding Universal Health Services or give up 13.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.97% |
| Values | Daily Returns |
Universal Health Services vs. Liontrust Asset Management
Performance |
| Timeline |
| Universal Health Services |
| Liontrust Asset Mana |
Universal Health and Liontrust Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Liontrust Asset
The main advantage of trading using opposite Universal Health and Liontrust Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Liontrust Asset can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Liontrust Asset will offset losses from the drop in Liontrust Asset's long position.| Universal Health vs. Uniper SE | Universal Health vs. Mulberry Group PLC | Universal Health vs. London Security Plc | Universal Health vs. Triad Group PLC |
| Liontrust Asset vs. Liberty Media Corp | Liontrust Asset vs. Cars Inc | Liontrust Asset vs. Universal Display Corp | Liontrust Asset vs. Flutter Entertainment PLC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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